Beer Lovers To Dig Deeper Into Pockets As Prices Soar Due to Digital Tax

BY DOREEN ASSASIRA

KAMPALA, Uganda|SHIFTMEDIA| Beer lovers who had already started complaining of the increase in beer prices from the normal Ugx3000- 3500 and 3500- 4000 now have reason to remained contented after the beer firms explained the increase in prices.

According to Nile Breweries, the manufacturers of Nile Special, Club Pilsener, and Nile Gold among others, the price of beer has gone up by Shs500 per bottle.

Nile Breweries Limited in a statement said the increment in prices follows the introduction of the Digital Tax Stamps, whose cost must be shouldered by manufacturers. Last year the government introduced the Digital Tax to address tax evasion. Though the manufacturers challenged the move in courts of law, they lost and were ruled out of order.

“Following the announcement from the Ministry of Finance that manufacturers of excisable goods must pay for the Digital Tax Stamps (DTS) from 1 July, we regret to announce that we see no other option than to increase our pricing,” a statement from Nile Breweries reads in part.

According to the statement, the new pricing came into force on September 1, 2020.

The beer producer claims that the changes aim to spread the costs of DTS between Nile Breweries, the retail and consumers.

“Adoption of the channel pricing by the distributors, the stockists and retailers will minimise the impact of the DTS cost increase as much as possible to protect the livelihoods of the tens of thousands farming families and all the others who depend on and contribute to the beer value chain,” the statement reads.

Manufacturers have continued to argue that the government should bear the burden of the cost of installing DTS. This is because the cost would automatically increase their production rates.

Digital tax stamps are physical paper stamps with security features that are applied to goods or their packaging, largely to verify tax compliance.

According to Nile Breweries Legal and Corporate Affairs Director, Onapito Ekomoloit, they have to part with Ugx30b to meet the installation of equipment to put the stamp on each beer bottle produced.

“The heavy investment required for the system means the business will be constricted, resulting in lower profitability. As per our projections, targeted volumes based on the proposed pricing show that the tax stamps will cost the company close to Shs 15 billion annually, and this would directly affect NBL’s growth, profitability, and sustainability as a local manufacturer,” he said.